Cost‐benefit analysis to provide decision criteria: A case study of municipalities in Japan

Abstract This study explores the use of cost‐benefit analysis (CBA) as a decision‐making tool by deriving boundary values that distinguish positive and negative policy outcomes. While traditional CBA relies on fully quantifiable inputs, this approach focuses on providing reference values for uncertain variables, using CO 2 emission reductions as an illustrative example. A case study of municipal subsidies for residential photovoltaic (PV) systems in Japan demonstrates how such boundary values can guide policy evaluation. The findings highlight the potential of CBA to offer objective benchmarks for policy discussions, emphasizing its utility beyond specific contexts, including CO 2 reduction, to broader decision‐making scenarios.